Do you have a fishing permit or carry out a fishing business? You should know about the related tax and legal considerations.
Governments have implemented several tax provisions to benefit, among other things, two specific sectors of our economy: fishing and agriculture. This article covers key considerations to help fishing business owners maximize their tax situation.
Unlike other businesses, specific tax provisions allow the owners of a fishing (or farm) business to transfer the business to family successors with no tax impact, either during their lifetime or at the time of death.
It is also possible to transfer the shares of a fishing business to family successors with no tax impact.
Only the assets used in operating the fishing (or farm) business qualify for a capital gain deduction on their sale.
The capital gain deduction on the disposal of a corporation’s qualifying shares is higher for a business that carries on a fishing (or farm) business than for any other type of business.
Individuals whose main source of income is from carrying on a fishing (or farm) business are not required to make tax instalments as often or for the same amount as individuals who carry on another type of business.
Asset acquisition: investment tax credit
Some assets acquired to be used in carrying on a fishing business qualify for an investment tax credit, that is, a tax subsidy that reduced their acquisition cost.
The tax authorities make it easier to claim a capital cost allowance in the year of acquisition of assets used in a fishing (or farm) business.
Advantageous tax rates
In Quebec, the tax rate on income earned by a corporation carrying on a fishing business is generally lower than for other corporations.
There is a specific employment insurance plan for fishers and they are the only self-employed workers who can receive these benefits.
A fishing business can be incorporated and there are some tax benefits associated with this option, the main one being a lower tax rate.
Note that a number of Fisheries and Oceans Canada policies limit or prevent the implementation of some tax reorganizations.
Do you have questions about the taxes applicable to fishing businesses? Our team of tax experts has the answers and can provide tax compliance and reorganization services.
Don’t hesitate to call on them; they have in-depth knowledge of the specific, complex tax provisions related to the fishing industry, thanks to their geographical positioning. We are close to our clients and we know their situation.
Come meet us to talk about your tax concerns and tell us a few fish stories!
20 Sep 2019 | Written by :